Anderson Graduate School of Managemen t University of Ca lifornia, Los Angeles
There have been numerous contributors to this book, for too mony to mention individuoU}( I fonnal!yacknow ledgingtheir contributions here. However, I have 10 sing le out one individual: Wi1hout Mary Clare McEwing, theexerutivedevelopmenteditorinch•.-geofthefimedition.thi<texibookwouldhavenotcome together. Thereisnobettereditor inthebusiness. Moreover,•llhoughPrenticeHall(P<:arwn) no longerpublishesthisbook,their1eam(led byDonnaBatti<ta) wereab<olutelyfirsi.ra tein all reSJ><:Cts. !appreciatetheirhelpalongtheway.
lvo Welch is the J. Fred Weston Professor of Finance and Economics at the Anderson Graduate School of Management ut UCLA. He previously held similar positions at the Yale School of Management and the Brown University Economics Department. He received his BA in computer science from Columbia University, and both his MBA and PhD in finance from the University of Chicago. His work has been fcantred in many academic journals, as well as in the popular press. Since 2013, he has also been the director of the Anderson Fink Center for Finance and Investments, editor of the Critical Finance Review, and a director of the American Finance Association. More information about the author can be found at book.ivo-welch.info.
This book is dedicated to my P<Ore,,ts, Arthur am/ Charlotu Wdch, to my wife Lily, a11d lo my rhre t childrw, Arthur, /.eonard a11d Greto
Pre face
M"'tmrporatefinancetextbookscovera<imi!arcanonofcon<-ept<,andmybookis no exoepti<H'l. A quick glance at the table of contents will <how you that most-though not oll--of1he10pics in this book (fonnerlytitle<l An /nrroduction) ovcrlapwithlhoseintraditionalfinancetextbook<andsyllabi.Thatsaid,1hisbookis imcmiooaUydiffcrent.ltfcatur.,.manyinnovationsinapproachandcmphasis.lfirrnly bclicvctha1itisthcbc•timrod\IClorycorpora1cfinaoccbookavailablcanywhcrc.Aftcr youhaveusedthisbookonce,youwilln01wanttogoback,
Thisbookisalsoanexperiment inpri<:ing. Allmajore«>nornicibookpublisher< believethatprofe«orsdonotcarehowmuchtheirtextbook<c0<t.Thi<bookputsthis beliefto t hetes<: thefir<1edi!ionwaspricedatS200. Thisthirdcditionisprioedat $60,anditisalsoavailableforfreeontheweb. (Thispriceislowenoughioallow many <mdcms w k""P thl< book even after 1hey ha..., romplc1ed the rour .) Of rour professorsshouldadop11hisbookno1becau.. ofitsprice.butbecau.. itisthebest (Forinstructors.i<comeswithafull..,t ofsupponma1erials.indudinganonlinetestingsite.)
Innovations in Approach
Everyintere<te<landmodestlytal,...tedstudentcanunderstandfinance. lbelieve 1ha1ourfinanreron<episarenomoredifficult1hanthoseinstandardtext•roveringthe principlesofeconomiciand1ha1ourma1hema1icsisnomoredifficult1han1ha1inhigh school. lbelievethatfinanceiseasies1whcncxplainedfrombasicprindplesandonly graduallyrampedupincomplexity.lalsobeliovo that.althoughiti•importantforour S1udents to learn how to solve traditional 1cxtbook problems, it is more importnn! for themtolearnhowtothinkaboutandapproachn<wproblemsthattheywillinevitably encoun1erinthercalwor1d
ALogkalProgressio n
Thebookstanswithoimpleand.ryli•ed>eenari°'inwhichrolution•areeasy. It th"" progres•es to more complex and realistic scenarios in which solutions are more difficult.Withinthisorchite<1ure.cliaptenbuildorganicallyonconcepi$leamedearlier. This incremental progre5'ion allow< <tudents to reuse what they have learned and to undemandtheeffenofeachnewchangeinandofitsel[
On< theme that binds the book together is the pmgression fr<>m the perfect·m.>rlu:t. l•w·of one·prio: kle•l world (on which almost all financ e formu4!s are based) <o an imperfect market (in which our formula< may n""d explicit or implicit adju$tments)
Numed ca l f.xampleLea ding toFonnula
! learn best by following a numerical example, and! believe 1ha1 s1Udcntsdo, too. Whenever I want 1ounders1andanidca, l1rytoconstructnumericalexarnples formy.,.lf-thesimpler, thebeuer. Thcrefore,thishookrelie<onsimplenumerical exarnple<asitsprimarytutorialmethod.lnsteadofa"bird"seye"viewoftheformula firstandapplka1ionserond.studentsstartwitha"worm"seye" viewandworktheir way up-from simple nun1bers 10 progre.,;vely more complex e'"mpl.,... (Numbers are oftencarriedin"blue" 1omakei1easier1osee1heprogre,..ofthcnumcricalexample.) Eachstepiseasy. /\tfirs1glance.youmay1hinkthismaybele,.."exew1ive"orperhaps notaswell·<uitedtostudenrswithonlyacuw.ryinterestinfinance.las<ureyou t hat neitheroftheseisthec•Se
/\corollarytothc numbers·fiutapproachismybeliefthatformulaicmemori,..tion is a last re$0rt Such a m1eappr<>ach leaves1he hou"' without 3 foundation Instead ofgivings1uden1Scannedformulas. l1Jyto teach t hemhowtoapproachand>0lve problems-oftenbydi<eovering t hemethod<them<elveo.Mygoali<toteachstudent< with a set of analytirat 100!• that will "and them in good
Many students come into daS< with a p•tchwork ofbackgroond knowledge. /\long the way, hole< ln theirbackgmundscausesomeofthemtoge1 lost. Not realil.ing whenthishappened.studentfrumationrises.lhavethereforetriedtokeei>thishook largelyself.coniained R>rexample,allnecessarysia1iSikalconceptsareimegratedin Chapter8(1nvestorChoice,Risl<andReward).andallnecessaryacoountingconcepts areexplainedinChapter!3(Fron1Financia!S1atememsioEcooomkCashFlows).
AS1Tong Distinctio n berween P,.xpe<1 edand Promi<ed Cash F!ows
!clearlydistinguishbetweenthepremium1ocompensa1efordefault(creditrisk). whichi•in1roducedinChapter6(Uncerrain1y,Defaulc.andRisk);andtheriskpremium, whichisimroducedinChapter9(TheCapitalAssc1PricingModel).Studcntsshould nolongermis1akenlybelievethattheyhavetakencareofcredi1riskbydiscountinga promised cash How with a CAPM expecled rate of return. (If they commit this error. it wouldhavebe<:nbetteriftheyhadncvertakenafinancecouosc tobeginwith.)
RclativeDeemphuisofthea PM
EverystudentneedstounderstandtheaPMbecau..,itisourmainstandard .This book explains it well. ltowf:Vl'r,italsoexplainswhyslUdentsneedtoknowitand thatlhcreiszcroempiriralevidencethal!heCAPMholds. Why are other textbooks perpetuatingafairy\>lle? Worse,forlong·termcapirnlbudgetlngofnon·finandal projects--exactlywhereweof!enneedtoestimmeanexpec1edopponunitycostsof capital the most-<>ne should not ei<pe<:l the Cl\.l'M to man er: (I) Since 1970, stocks oU1performedlon.g·termTrea.uriest>yless1hanl.5% peryear. (2)1'ore<:astin.ganequio;y betaover5 20yea"', C"enforhighlyaggregatedponfolios•uchasindustfyportfolios, i• noi>}'- lJ.eta cstjmates thus require much mo.-e shrinkage than is common. The product ofthe<e two estimate< i• small. This does not mean that all projects require the asset·dass and tenn·struCture based altematjve wrako
Throughout, I describe what finance practitioners can know dearly and what they canonlygue<sat(wi1hvaryingdegreesofaccuracy). lntheapplica1ionofanumber offinandal1ools, I point out whichof1heguessed uncenaimiesareLikelytohave imponamrepercussionsandwhkhareminorincon..,quence.lalsotrytobehonest aboutwhereouracademicknowledgeisso lidandwhereitisshaky.
A<elf.<:on1ainedacroun1ingchapier(Chapterl3: From Financial Statements to Economic cash FloW<) expi>'lins how Mmings and economic cash floW< relate. When "udentsunderstandlhelogicofrorporatefinancia!statements,!heya•·oidanumberof commonmistake<tha1havecreptintofirut11cialcashflowcalculations"t>ytradition." lnaddition,asynthesizingchap1eronprofonnas(Chap1er20: ProR>rmaFlnandal Statem..,ts)combinesalltheingredientsfrompreviouschap1er:<-<:apitall>udgeting, taxes,cos1ofcapi<al,capitalsuuc1ure,andsoon.ManysrndemswHlbeaskedintheir furnrejobstoconstruc1proformas,andourrofPOrateflnancecurriculumhasnotalway> prep;ored!hemwellenoughioexeal[e suchassignmentsappropriaoelyandthoughtfully.
Co ml>"Tablcs
A chapter on comparable; (Chapter 14: valuation from Comparables and Some l'inancialRatios),11SuaUyootfoundinothcrcorvoratefinancetex1books,sliows thatif usedproperly,thecomparablesvaluationmclhodisagoodcousintoNPll.
• Corporateclaimi;donotjusthavecashnowright1but importa ntcuntrol righ tsas fact has n1any implicatio,,......,ven for one common proof of Modigliani·
• UnleS5 thc firm is to financial dime.,, it probably does not mancr much how 1he6rmisfinanced. Projectchoiceislikclytohefarmoreimponantthanlhe debt..:quitychoice.(Thisdoesnmmeanthataccesstofinancingisnotimponam, juS1thac1hcexa<1mixisoo1.)
• Corporateliabili1iesarebroaderthan jus1finan<ialdebl.!nfact,Qna"<'rage, about two·thirdsoifinns'liabilitie;a..,nonfinanciaL Thefinnvalueisthus thesumol itsfina ncialdebtandequityplu.< itsnonfil!3ncialdebl{often linkedtooperationo). Aga in,this canl>eimponantinanuml>erofapplkation<.
• The debate abou1 trade.off theoiy today has moved 10 how slowly ii happenswhethcr it take• Sor S-0 years for a firm to readjust.
• !listorical S!ock returns ore a major determiMn! of which fimis today have high deblra1iosandwhichhavelowdebtratios.Asimplei11specrionof1heevolution ofl8)11'scapi1als1n1cturcfrom200! to2003inChapter !Smakcs1hisplainly obvious.
• Capi1al S!ructure may not """"""arilybea eorvorate..ooritrol device. On the ronirat')\ equity heavycapi1alstructurescouldbe1heresultofabreakdownof corporatecon1rol.
about capital S!ructure in imperfect markets. !t shows how APV fits wi1h 01her non·tax·relatedimperfectiono
B asic Org anization
F..u<ntiolCorp<>mrtFinancrcover< all the topie<ofthe usualrorporatefirutncto CurTiculum.H<JWe,·er,a•notedabO\-.,.theorganizingprinciple ofmovingfromperfec:t to imperf.,.,,marketsun ifie<thecorechapter<.Thi<progressionfromfirutntial"utopia" tothecomp!exrealworldi$espe<iallyapJ>"rentinthefir<tthr"'=P•rt<nfthebnokand isrevisite<lmultip letime<inPanVoncapital.,ruc:ture
Pan Ill: Vl!lue and Markel Efficiency in an lmpcrfcCI Market desc•ibeswhat happen< iftheperfectmarke!assumptionsdonotholdinourme<•ierrealworld.i\lthough theperfe<tmarketa'5umptionsfonnthebasisofmostfinancefonnulas(5ucha$ NPVand1heCi\PM)andha,-efacilitatedthedevelopmemoffinanceintoamodern <cience.th eyarenotalway<realistic. Thus,inthi<pan,twochapter<examine
:":.i ',":xi!;
rationalandbehavioralfinance, area!soexplained
Panrv:Rcal-World i\pplication [>UJSthelheorytoworkinthrecchapters. It show• !hat ohhough thefinondal concep1' rn.iybesimple, theiropplkat;on can be compln. Thi• pan examines o wide range ofi5Sue• and pitfall• co consider when puningNPVandlRRtowork.looksatfinandalota\ementanaly<i•fromafinance perspecrive,andconsidersthevaluationtechniqueofcomparabla
PartV:capitalStructurcandPayoutPol icyconsidersthecapital"rucrurethatfinns shouldch00<e. lt'1artsagainwithaperfec1 -marketthemeandthen<how<infi>·e chaptershowthi<>houldplayoutinanimperfeetworldofcorp<>ratetaxe<and should push finns toward more equi1y
Thiseditionofthehookisdiscipline<linkecpingonlyenoughcomcnl1ofi11he nolcs..irnponambutirnpossibletocovcrinafirstcourse-isnowina • eompanion" hook.This300·pagehookisavailableatcost:<m·demandprintedforS2Sandonlinefor fr ee. lnstructorscanalsoprimanddisuibuteindividualchap1ers.Formaningisthe same ositisin1hisprimaryhook 1"hecompanionindudessuchchaptersas"ln<emational fina"""." which are a nec=ary checkbox for MCS8 accredi<ation-bul which no intmduc<nryfinanoecnursehas..,.rfoundtimetocnver.
The companion includes more detailed coverageofcapitalstruc<uredynamics (Chapter21).rnpitalsu1JcturepaucrnsintheUni1edScates(Chapter22).lnvestmem 8ankingandMergers&Acquisi1ions(Cha1>1..,.23).CorporateGovernance(Chapter24). Internmional f inance(Chapter2S).andOp1ioruandRlskManagement(Chapcer26).U alsoincludesappendice•toChap1erS(how1oextractandlockinforwardrates.howco calC1Jla1ebondduration>.how1ohedgeinterestrisk.howtocornpoundcont inuously, andhowTreasuriesare quotedin1herealworld);Chap1u8(moreexplana1ionsfor theefficientfronti.,,-);andChapt.,,-9(cenaintyequivalence two-ponfolio.<eparntion, cherelation betweenthernean-varia ncceffidemfrontierand1heCAPM.andavailable CAPMalternativ"'S,SuchastheAPT);Chopterll (anevent<tudy);Chap1erl2(mOTf! real-optiondecisiontrees);Chapterl3(1heC0<a-Colafinan<ials);Chap1erl6(how CAPM,WACCandNPVfit);andChapierl7(howtothinkofthediscountfa<1oron 1axobliga1ionsandon1he1axshel1ereffecrofdeb1). Eaehchap1erappendixisbriefly previewedin1hemain1ex1. FinaUy, 1he hook'swet>site(hook.ivo-wel<h.infoJ has a ehaprnronquamita1iw:realop1ionimpleniema1ionandaprovora1i\..,cha1>1eronethics.
Chapter S Time-Varying Rates of Return and the Yield Curve
l'inanceissuchanimponantpanofmodemlifethatalmosteveryonecan benefitfromunderstandingicbencr.Whatyoumayfindsu.,,risingisthat thefinandalproblemsfadngl'l:p.<iCoorMicmsoftarenotreallydifferent fromthosefocinganaverageinV<:stor,smallbusinessowner,emrepreneur. orfomily.On them0>tba•icle•1'l,theseproblem•areabouthowtoallocate money The choices are many: Money can be borrowW, saved, or lent Money can be inve<ted intopro}'<:t< Proje<t$Cart be untlenaken with panncrsorwith t he a idoflenders. Proje<1scanbeavoidedaltoge1herif theydonotappeartobevaluableenough.Financeisaboutdecidingamong
The main rea<on why you need to ..,.;maie value is that you will wan! 10 buy objects wh"9evaluesare obove1heire<>S1s andavoid1ho1ewherei1is1hereverSe Sounds easy? lfi1wereonly<0. lnprac1ice.findingagoodvalue(valuation)isofienverydifficul!. Bu! ii is not tM formulas 1hat arediffirult-even the most "°rnple:tfonnulasin this bookcomainjustafowsyrnbols.andthem·erwhelrningmajorityoffinancefonnulas useonlythefivernajoroperntions(addi1ion.subiraciion.rnul1iplicatioo,division.and exponen1ia1ion).Adminedly,e•1'nif1heformulasthemselvesarenmsopliistkated,1here arealo1ofth cm,and1heyhaveanimuitiveeconomicmeaninglhatrequirescxperience 1ograsp. Dmifyoumanagedcopasshigll -schoolalgebra.andifyouaromo1ivatcd.you willbeable!Ohandlethemath.
lnstead.thebigdiffirult iesliein1herealworld,beyondfinanC<l theory. You often have1od..,idehowyou s houldjudgethefuture-whe1heryourgi>rnowillbeahitora busi, whether the economy will enter a recession or not, where you will find product marlte!S. how you can advertise. how in1eu•s1ratesor1he stock market will move. and on and on . This book explain what you should forecast and how you should use )'Ollrforerastsintheb<>stway,butitmosilyremainsupm)'Ollrnmaketh=forecasis.
TM'-ol"""prie<! V>h>o&obi«"is ................
Ms<...._..,,._ l<rw>od!oo"WI , .,. _,
Putting thi• more positivdl\ if forceas15 onJ valuation were ca5y. a computer could take over this job. This will nevei- happen. Valuation w;JI alw•y< remain a matter of both art and..:iern:e.whjchTC<juiresjudgmentandcommonsense.TI><fonnulasandfinantein thiobookareneeessarytoolstohelpyouconvenyourrea'<lned.informed.andintuitive aW$Smentojntogooddecisions.Buttheyarenotenough
::.worth more or less than equivalent alternatives. 1han it is !O put an
For example, consider the value of a car-say. a 2007 Tuyota Camiy-that you own. Ifyoucanfindotherca"'1hatareidenticaltoyou rcamry-a1Jeastalongall dimensions that matter-then it should be worth the same and sell for the same price. Fortunately.fora2007Toyoiacamry.thisisnottoodifficuh. There are many other 2007ToyoiaCamries.aswellas2006ToyotaCamries,2008ToyotaCamries,and2007 HondaAcrords,tha1youcanreadilypurchase lftherearelOotherexactequivalen1' ontl>esameblockforsalc.yourvaluadontaskisouuighiuivial
What would happen if you make a mistake in valuing your Camry? If you put t <>O !owava!ueonyourcar,youwouldselli1toocheaply. Jfyouput1<>0highavalueon yourcar.youwouldnotbeabletosellit.Naturally.youwanttogetthe,'3.lueright
ArelmcdwayofthinkingaOOutyourCarnrywrsus!hcaltemativesisthatyour Camryhasan"opportunitycost "Yourownersh ipof1hcC.mryisnotfree. Ignoring trrmsae1ioncosts,youropportunityis1osellyourcarandputthase•no1hercamry.or Ao::<:>rd. or anything else with 1hi• money. L.ct'•say 1hat the Accord i• your alternative anditisequiva!entinalldimensionsthatmatter.lf'<lmooneweretooffertopaySl.000 aOOvetheAcrordvalueforyourCam'l(•hepricewouldbeaboveyouropportunity<:011 Youshouldthensellthecamry,buytheAccord.andgainSl,000
Thelawofonc pricerarelyappliesperfeccly. Bmi<oftenappliesimperfec1IJ< For example.yourCamrymayhave65,334mjlesonit.begre<:n,and belocatedinl'rovi· dence,Rl.Thecomporablecarsmayhavc between31).000and50.()l)()milesonthem featuredifferentcolor1,andbelocatedinother opotsonthc EaStCoa$t.lnthiscase,1he lawofonepric<:nolongerworksexactly ln$tead, itshouldholdonlyapproximately That is. your car may no1 be worth the same exact amount as your comparables, but it should be worth a similar amount, perhaP' using a sensible price adjustmentl
The1askofvaluingobjecuberomesmoredifficuhwhenyouareunable(ornot aUowed)toRnds imilarobjectsforwhichyou knowthev•lue. lfyouhadtovaluc your2007CamrybascdonknowledgeofthevalueofplasmatelevisiOn$.vacations.or pondls, then your valuation task would be much more difficuh. Common sense implies thatitisea<ierto\'alueobjec"tsrelorivetodosecomparnbleobjecrsthantoobje<:t<that arcverydifferent. lnthc realworld.someobjectsarc intrin sica lly cnytovalue:others
Ql L Diseu.,howeasyit istoputavalueonthefollowingobjens
comefromhaulinggorbageorsellingl'radahandbags. Ca>hi$cash. However,il Ls irnponan11hatallcostsandbenefitsareincludedascashvalues.Ifyouhavetospend alotof1imehauli ngtrash whicltyoulinddistaSteful.thenyouhovetotranslateyour dislike in1oanequivalen1cashnegative.Similarly,ifyouwanttodoaproject "forthe Thedisciplineofflnanre takes overafrnrallpositivesand negatives (inflows and outflows) from the project "blackbox" havebeenuanslatedimothcirappropriatemonc1arycashvalues.
The Joy of Cooking: PositivePtutigeFlowsandRe<taurantFailures lnNewYorkCity,twoou1ofeveryfivenewreS1auranl<dosewithinoneyear.Na1ionwide.thebest estirnates suggest that about 90% of all reS1auranu dose wiihin t wo years. If successful, 1he average reS1ouran1 eam< aretumofabout IO'lllperyear.Qneexplanationforwhysomanyentrepreneursarecon1inuingtoopen up restauran1S,despi1eseeminglylowfinandalra1e<ofmurn,is1ha1reS1aurateursenjoyowningaresrnuramso much1hattheyarewming1ol>uy1hepres1igeofowningone. If1hisis1hecase.then10value1heres1auran1, you mu" factor in how much the restaurarnur i$ willing to pay for 1h• prestige of own ing it. ju« as you would facrnrin1herevenue•1ha1resiaurampatronsgenera1e.
Thisdoesnotmean1hat theoperationsof1hefinn-i<sue<likemanufacturing. wi..,;,.in1hobl>ck inventory, sales, rmirketing. J>llyables working capital. e<>mpe1iti<>n. ond so on-arc boo< " pro,«! " """' unirnpona nt.Onthecomrary,thesebus ine«factonarealloftheutrn<>St irnponance in °"""'m"""<Jl ;t makingtheca;hflowshappen ondagnod(financial)managermustunder<tandthem Afterall.evenifallyoucareabotnareca<hflows,i1i5impo<.<ible10undemandthern well if you have no idea where they come from and how they could chaJ18e in the Future.
Proje<:tsneednot bephysical. l'or e• ample,acompanymayhaveaprojeacalled "CU$tOmerrelation$."withu,alca•houtllow•todayanduncenainfuture inllom You(a '1mlen!)canbevieweda$ aprojea:Youpayforeducation(K<:a>houtflow)andwill carnasalaryin t hcfuturc(a<a•h inlluw).lfyouva!ucthcp.-eS!ig<thatthcdcgrttwill offer,you•houldal<oputaca1hvalueon it.Then, t hi1toowil!coun1asan01hercash inflow. lnaddition,someofthepayoffsfromeduca1ionaremetaphysica!ra1herthan physical.lfyoulikemakingfriend•inschoolor ifknowledgeprovid..iyouwithp!easure, eithertodayorin1hefurnre,1heneducationyield1avaluetha1shouldberegardeda1 a positive cash flow. (Thedt.<:iplineoffinanremakesitea;yon it<elfbya<kingyoo10 pm a hard ca1h value number on these or any mhcr emotional factor•.} Of course. for somem1dems.1hedisia>1eofloarningshou!dbefactoredinasarost(equi,·alemcash outllow)- bmluusicha1youaren01oneofthcm.Allsuchnonfinanci.alflowsmustbe appropriately!ranslatedintocashequivalcntsifyouwanttoarriveatagoodprojea valuation
Infinance,a firm i<viewedasarollectionofproject< . Thi<bookassum..ithotthe value of a ftmt is the value of all its projects' net cash flows.and n01hingel<e. the me1aphorcan also extend to a Your family may own a house, a car. have 1uitionpayrnents,educationinves1mems.andsoon- arollectionofprojens.
Therearetwoimponant;pecifickindsofproject0thatyoum:1yconsiderjnve;ting in-bonds and stocks aloocal!ed debt and equity.Thesearefinancial daims thatthe finnu<uallysellstoinv..itors.Myouwillli:•mlater,youcanmo<tlythi nkufbuyinga s10dastheequivalentufbecominganowner.Youcanthinkofbuyingabondas1he equivalentoflend;ngmoneytotheissuer.Ineffect.abondholderi<ju<tacreditor.For example,afinnmaysellalendera$100bondinexchangeforapromi<edpayrnentof Sl!Onextyear, (lf1hefirmwere1operformpoorly,lhebondwouldhave1obepaid offfirst,soitislessriskyforanin.,.,.,orthanthefirm'sequit)< However, it ha< limited upsidc.)lnaddicion,chefinnusuallyhasotherobligations,suchasmoneychatith8'to pay10iissupplicrs(called"payables").Togechcr,ifyooownalloutstandingdaimson chefinn.tha•io,aUobligmion<andallstock,thenyouownchefirm . Thislogkisnot
Entire Firm • All Outstanding Stocks+ "II Outstanding Liobilitie• i\sthe 100%owncrofafinn,youownall itsstocks,bonds,andothttobligations. Your entirefinn1hendoesitsbusinessandhopefullyeamsmone}<ltdoesnotneedtopay out immediately what ii earns, !hough. Uran reinvest the money. Regardless of what chefirrndocs,youslillownicinitsentirecy.
Yetanotherway1olookatthefirmistorerognizetha1youwillrecei""allthene1cash fiowsthatthefinnwil!payou t (e g.,in1Cre'1pa)'lllen,.ordividends},adju'1ing,of rourse,forallthemoneythatyoumayputintothefirminthefuture.
Entire Finn = All(Curren1a11dFurnreCash)lnflows-Outflows
It follows immedlaiely that all the payments satisfying stocks and liabilities mu" be equaltoallthefirrn'Snet<ashflows. whi<hmus1 beequaltc>thefirrn"5netpayout$.All oftheseequalitiesreallyju<e<tatethesamething:"'Valueadd•up."
Ourbookwillspcndalotof1imediscussingclaims.andcspeclallythedchtand equityfonnsoffinandng---bmfornow.yoocanronsiderbothdebtandequitytobejuS! simple investment projeels: You P\lt money in. and they pay money out . For many srock andhondinve!tment$ thatyoucanbuyandoellinthe finan<ialmarkt,ts,itisreoonable toassumetha1mostinve.,orsenjoyveryfew.ifany.non·caSh·b;uedbenefi1S(suchas emotional attachment)
Q 1.3. If you purchase a house and live in ii. wha1 are your inflows and outflows?
1.3 Firms versu s Ind ivid uals
Thi•bookisprimarilyaboutteachingconcepto thotapplytofirms. lnpanicular.ifyou arereading1his,yourgoolwillbetolcarnhowyoushot1lddeterrnineprojects'values. g;venappropriatecashAows Whatisyourbe>ttool?Thelawofonepr;ce ofrouroe Thesamelogk1hatappliesrnyourcamryappliesrncorporateprojeetsin'hereal world. Many have close comparnbles that make such relative valuation feasible. For example,sayyouwanltoputavalueonbuildinganewfactoryinRhodclsland.You havem"nyaltern•tivesc Youcouldlookat1hevoluesofsimilare>istingorpotcntial foctoriesinMassachusens. Or you rouldlookatthevaluesofsimi1irfoctoriesin Mexko. Or you could look a1 how much it would co" just to purcl>ase the net output oft he foctory from another company. Or you could deterntine how much money you undemandhowtoestimateyourfoctory'ovalue.-.lativttoyourothtroprottunirid .you thenknowwhetheryou•houldbuilditornot.Butno<ollprojeC!sareeasytovalue in rela1ive1erms. Forexample,whatwouldbethevalueufbuildingatunnelacrossthe Arlantic,ofrontrollingg!obalwarnting.orofterrafonningMars1omakeithab;1able forhumans?Thcrearenoeasyalternativeobjecrstorornparesuchprojeasto,soany valuationwouldinevitablybehaphazard lfacorporationcandeterminetheva!ueofprojeC!<.thenitcandeterntinewhether it should take or poss up on •hem In the first part of this book, where we assume that the world is (wh ich will be explained in a moment). you will learn that haveauniGuevalueandfirmsshould1akeallprojecrsthotaddvalue(inanabsolute ..,nse). Later on, the world will become more realistic. and you will rerognize ihat pro.ie<'<scanhaveavaluethati<differentforsornefirmsthaniti<forothers.lnthis
"'1incorestingaspe<:1ofc<>rr<>ratededsioomakingisthot1he<>Wnersare<>ftcnn<>t 1ltemanagers. lnsiead, themonagersarehLredprofessionals. F<>rapublidy-traded corp<>ratiQn 1hat may have milliQns Qf shareholder owners, e""n the decisioo to hire managersisdefa<1onolongcrmodoby1he<>WTiers,bmby1hcirrcpresmia1;vesandby other managers
Unfonuna1ely, itisjus1notfeasibleformanagerssimply1oaskalltheownerswhat tlteywant.Therefore,oneofthehas icpremises<>ffinaneeistha1own<'l'Sexpe<:1their managers 10 maximize 1he value <>f the finn You will learn 1ha1, in a perfect world, managers always know how to do this. ltowevcr, in the world we live in, 1ltis can sometimes be difficuh. How should a manager act if some owners dislike in\'<lsting in cigarettes,yetotltenbelie""thatthefinnhasgreatopponunitiesinsellin8greentea yetotherobelieve thefirm>houldbuildwarships.yetothersbelie""the firm•hou ld jus< putallthemoneyinto1hebonk,andye101hersbelieve1hefirmshouldretumalltheir money to them"' Th.,..e are among the more intriguing problems that this book covers Theneedformanagers1odecideonappropriateobjecti\'<lsalsoraisessomeinter esting ethical concerns, m0<1 of which are beyond the scope <>f this book But let me montioooneanyway. /\s l justnoted,thestandardviewisthatcorp<>rationsaresel up to maximize the wealth of their owners. 11 is the government's job to create ml"' thatronstrainCOipOratioostodosoonlywithinethicallyappropriateboundaries.Thus, romewillargue<hatitisthoroleofpublicinstituti<>nstopasslnws thnt reduccthe "'leofprnductsthatkillk .g.,cigaren.,.),nuttheroleofthccorp<>rationtoabstain fromsell ingthem lfno1hingeise.theyargue,ify<>urCOrp<>ra<iQndoesnQt..,U1hem, romeone else almost surely will- (You c•n see <his framework to help you under· s<androrporations.notanormativenpiniononwhatthemoralobligati<>nsofrompanies should be. Nevenhelcss,i<i>alSQaviewthatmanypeoplehaveadoptedastheirnorma· tiveperspec1ive.)A<ifsellingharmfulprodu<=tSwerenrnacomple•enoughdilemma <:<m<iderthatlaw$areoftenpas<edbylegislatonwhoreceivedooatioo•fromtobaeeo corporations.(lndeed, publieinstitutionsare inten1ionallyset uptofacilitatesuch rwo-way "communications.; What are the moral obligations oftobae<:<> firm owners, theirrory>ora1ioos,andtheirmanagersnow?Fonunately.youfirs1need1oleamabout valuemaximiza1ionbeforeyouareready1omoveonto1hesem11gherques1ioru.Forthe most part. this book sticks with the view that value maximization is the corporation's mainobje<tive
Q 1.7. Adegreeprogramcosts$SO.OOOint01alex penses: $30.000intuitionand S20,000inhousing andbooks TheU.S.governmcmprovidesaSI0,000 gramforthe1ui1ion. Moreover, t he university pays S20,000oftheS30,000tuitioninsalal)'!oyourin structors . Be<:au>ebeingintheprogramiswmuch fun.youwouldbewiUing1opayanetof $S.OOOfor
theple3'ure,rela1ivetoyouralmrnatives.Whatis1he net cost of the education to you?
• lnChaptcrl,westa11with1hesimplts11X>'Sible scenario.lnadditiontotheperfeccmarket,we assumethotthereisnouncenainty:Youknow everything . And we assume that all ra t es of re1Umin1heeconomy•rethe,.1me:A !·year investmempaysthesameandperfecdyknown men1.Under1heseas.<umptions you leamhow !-year returns transl.ate in!O muliiyur reiums andwhenyoushouldacceptotrejecraprojecr The<h•pterin!rodure<1heimponantron<'ept of"preseniva!ue."
1)picalqu<':ltions:Ifyoueam5%peryear,how muchwillyouearnover!Oyears?lfyouearn 100% over IO years. how much will you earn peryear?Who1isthevalueofaprojecrlhat willdeli\'<:rSCOOO,OOO inlOyears?Shouldyou
• lnChapter3.youlearnhowtovaluepani<;ular 1:.ind•ofprojecto-perpetuitiesandannuitieoif1heecooomy·widei nterestrateremoinsron· stant.Youthenleamhowtoapplytheformulas !OthevaluationofS1ocl<.<andbonds.Thepopul.arG<>rdondividendgrowthmodelforv•lu· ing<tod.'.sa«umesthatdividend<ateasimple growing perpetuity cash Aow<iream, which makes ii a perfecrapplicationoftheperpetu ityformula. Mongagesandotherbondsare
J)"pimlqumion.<:lfafirmpaysSl/sharedivi· dendsne«year,growingby3%peryeatforever. thenwhatshoulditsstockpri""t..? Whai is themonthlypaymentforaS300,000mongage bondiftheinterestrateis4%peryear?
1YJ>ical q11tstion.: !fa projeo:! has one invest· rnen1 outfiow and two rernm inflows, how wouldyoucomputea"rareofreturn"? Om youacceptprojettswhoserarnsofreturnare above1heirc<>S1ofcapi1al?Howbadisitwhen youuseincorrecrestimm.,._,,.youineviiably will-inyourcalrolations? What arethebig problemswitharulethatacreptsihoseproject.s thatreturnmoneym<>Stquickly?
• lnChapterS,)1)uabandontheassumption1ha1 annualratosofreturnarethc<am<!forproj<:as with different durations. For example, J.year investmentsmaypay2%peryear, while 10 yearinvestmen!Smaypay5%peryear. The sccnarioot1imc.varyingra1osofreturnismorc realistic,bm1heqt1estionstha1youwam1oan swerotillremainthesamea<thoseinChapier2. {Thcchap!crthcnalsocxplainsmorcadvanccd aspectsofbonds,suchastheli'easuryyield CUfVe.)
'/)'pi«i!q11tstioou: andl0%in!hesecondye3r,howmuchwillyou eamoverboth)'<'ars? Whal is the meaning ofa4%annualizedinterestrate?Whatisthe meaningofa4%yield·to·maturity? Howcan youvaluepioject•ifapproprioteratesofreturn
• InChapter6.)1)uabandonlheassumptiontha! you know the future. Tobeableto5tudyun· «rtaintyintherealwor!d,youmuStfirstlurn how to describe it. This isdonewi1h stati•·
tks, thenecessaryaspecisofwhich are also explainedhere.Thechapierthenjn1roduces riskneutrality,whichisanassumptiorithat<:an make it easier to undecstandsomeron«pu infinanceunderun<:<:nainty. mostimponantron«ptsarethedifferencebe. tweenpromi<edandexpe.otedratesofre1um andthedifferencebetweendeb!andequit)<Un derun«nainty,aprojecimayno1 retumthe promi<edamount.Becauseof1hepossibili1yof default,the!laledrateofrernmmustbehigher thanthee..<pe<tedra1eofreturn.Althoughyou are;merestedinthelatter,iti•almostalwayo onlytheformerthatyooarequoted(prnmi..,d). It isimportanl thmyoualwayodrawasharp distinctionbetwe<:npromised(staled)rotesof retumandexpec1edra1esofreturn . These::· ond cone<:pt that this chap1er is the clairnsthathaveameaningfuldifferenceon!y under uncertainty.
1YJ>itn/qu"'''"""'' lfthereisa2%chancethot your borrower will not return the money, how muchextraUtterestshouldyoucharge?From aninvestmen1 perspeciive, wha1isthediffer. eneebetwe..ndeb!andequi!y?Whatisfinanc. ingpriority?Whatisaresidualdaim?
tookingahead,Partllwillcontinuewithuncer· taintyscenarios in which investors are risk averse Partlllwillexplainwhathappenswhenfinancialmar· ketsordecisk>nrulesarenotperfect
Webeginwiththeconceptof•rnteofremrn-thecornerstoneoffinonce Youcanalwa}'Jeamonintere1trate(andintere11rate•are ratesofretum) bydeposi1ingyourmoneytodayintothel>ank_ Thismeans1hatmoney t <>dayisrnoreva!uable thanthe•ameamountofrnoneynextyear_ This <0nceptiscalled1he1imevalueo/mm1ey(1VM)-S l inpresemvaluei< betterthan $ linfuturev•lue lnvestorsmakeupjustonesideof1hefinancialmarkets.Theygivemoney todayinordertoreceivemoncyinthefuture Firmsmakeupthcother side. The P"'"''" firms use 10 decide what 10 do with their money- which projectstotakeandwhichprojectsto1><1ssup-iscalledcapita/bu<(g<li11g. Youwill \eam1ha1thcreisonebes1me1hodformakingthiscriticaldecision. The firm should translate all few.-. cash flows-both inllows and outHowsinto their equivalent p,..,,.,nr today. Addinginthecashflowtodny give51henetpro.«'nfV(l11'e.orNP\ll"hefirntshouldtakeaUptojectsthat havepositivenet presentvaluesandreje<=tallprojec1stha1havenegati,.., net present value• Thisallsoundsrnorecornple>.thanitis.sowe·dt.etterget.,aned
2.1 The Basic Scenario
M promised. we begin with the simplest possible seenari<I. In finance. this means iha1 weassumethatwearelivinginaro-called perf""tmarket:
• Therearenodifferencesininfonnationoropinionsamonginveston{although there can he risk) .
• Therearesomanybuyersandsellcrs(in.,...1orsandfim1S)in1hernarke11ha1the presem:eorabsenceofjust<H>e(orafew)indlvidualsdoesnothaveaninfluence on t he price
Thepe1f"'1rnarketallowsus1ofocusonthebaskconceptSintheirpure<tforms.withou1 messy real -world factors complicating the exposition. We will use these assumptio11S as oursketchofhowfinMcialmarketsopemte.thoughnorne<:es,.rilyhowfirm"pror.lue1
market• work. You wm l•arn in Chapter 10 how <o opera1e in• world that i• not perfect (Thiswilll>ea !otmessier )
• Theinterestrateperperiodisthesame
• Thereisnoriskoruncenaint)<Youhaveperfectforesight. OfcourSl'.thisfinancialutopiaisunrealistic. However,1hetool<thotyouwil!learn in this chapt.,- wiU also worl< in lat.,- chapt e.-., where the world becomes not only progrcS<ivdymorcrcalisticbutalsomorcdiffi<u!t.Conv"""l)<ifanytooldoc<nutgi"" the righ t answer in our <imple wo,ld. it would surdy make no <en«: in a more reali<tic
Q 2.1 . What are the four perfen market a"umptions?
2.2 Loans and Bonds
Thematerialin<hischap1erisea•ies11oexplaininthecontextofbondsandloons.A lo.an is the commi1men1 of a borrower to pay a predetermined amount of cash at "'1C ormorepredetennined•imesinthefu1ure(thefinalonecalled maturity).usuallyin exchangeforrashup-fronttoday.l.oo<ely<peaking,thedifferencebetweenthemoney len<and1hemoneypaidbacki$the intcr·<,;t thatthelenderearns.A bond isapanicular kindoflo•n,<0nrunedbecauseit"b inds"1heborrower1op:tyrnoney. Thus, for an investor-, "buyingabond"isthe$3me as "extendinga loan ." Bond buying i<theproc•" ofgivingcashtodayandreceivingaprorni.. forrnoneyinthefuture.Similarl)<fromthe firm"<J>Ointofview,itis"givingaOOnd,""issuingaOOnd,"or"""llingabond."!nansand OOndsareal<0<0metimescalled fixedincomc .becau they"promise" afixedamount ofpa}T1lcnts!o1heholderofthebond.
Youshouldvitwabonda<ju<tanothertypeofinveS1ment pn:>ject-moneygoe< in, and money comes out . You mu/d slap rh< name "mrp<>mf< profe<t"on the cashf/<YW.< intheaamp/<.<inrhi.!thapttr,andnothingKooldthang<. lnChapterS, youwillleam moreaboutTheasuries whichorebondsiS<uedbytheU.S.Theasury.Thebeauryofsuch bondsisthatyouknowexacrlywhatyourrashnowswil!be. (Despite Washington's dysfunttion, we will assume that Treasuries cannot default.) Besides much more capital intheeconomyi<1iedupinbondsand loansthani•tiedupinstocks,<0undemanding bondswellisveryu<efulinit .. lf.
lo N<ly onl)' Tn ttii• chapter. we will make three additjonal assumptions (!hat are not required for -""'-:::,::,;;:: a marke1 iol>econsidered"perfect") iofunhersimplifythe world: lnt •'1 •••..-li t«I u,,.tt
Youalreadyknowthat t henet returnona!oaniscalledintereSt. and that the rate of return on a lOM is c.,JJed 1he interest rate-though we will soon firm up your knowledge about interest rates. One difference between an interest payment and a noninterestpaymentisthilttheformerusuallyhasamaximumpayment,whereasthe !anercanhaveunlimitedup<ideJ>Otential. However, no1everyrateofretumi<an in1erestrate.Forexample.aninvestmen1inalouerytkketisnotaloan.soi1doesnm
olfer•nintere<tr•te.ju5'•mteofreturn lnreal life.itsrayolfisuncenain-i1could be anything from tern 10 an unlimited amount The .,.me applie• tO stock• and many COlJ>Ornteproject$ Manyofourexamplesu,.,thephra>e"interestrate."even thou gh theexamplesalrn0&talwaysworkforanyotherratesofreturn.too lsthereanydifferencebetweenbuyingabondforSl.OOOandpuningSl,OOOimo Thebondisdefinedbyiufu1urcpromised payoffs-say. SJ.IOOncxtyear-and1hcbond"svalue andpricetodayarcOOsedonthesc future P•')'Offo. But a$ the bond owner. you \mow exactly how much you wiU receive nextyear. Aninvestmentina00nksavings•ccountisdefinedbyitsinves1menttoday. Theinterestratecanandwill d>angeeveryday.•oyoudon<>tknowwhatyouw illend upwhhne>1year. TheexactamQ1Jntdependso n futur e interestrates . Fore)l3mple,it couldbeSl.OSO(ifinterestratesdecrea,.,)orSl.l20(ifinterestratesintrease).
lfyouwant.youcanthinkofasavingsacroumasa""'luenceofcon,.,cutivc l·day bonds:Whenyoudepositmoney.youb\ly a l·daybond.furwhichyoukllow theinterest rate this one day in advance, and the money autommkally get> rein,·ested tomorrow into anot her bond with whatever the interest rate will be tomorrow.
2. 3 Return s, N et Re turn s, and Rates of Return
prnjectth•lreturnoS12attimelhas
c 1 • RetumatTimel • 5 12
Thesubscriptisaninstamintime,w;uallyabl>revia1edby1helener1. When exactly timeloe<:ur<i• n0timponant:hcouldbetomorrow.nextmonth.ornextr<=ar.Bu1if wemean"rightnow,"weuse1he•ubscript O
example, if the investment com 510 1oday •nd returns 5 12 at time I with nothing in between.tl>enitearns•netreturnof S2.Notation·wise.weneedtousetwooubscripts on retum$-the time when the inve•1ment starts (0) and when it ends(])
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Title: Puutarhuri
Suorasanaisia runoelmia
Author: Rabindranath Tagore
Translator: Eino Leino
Release date: April 15, 2024 [eBook #73399]
Language: Finnish
Original publication: Helsinki: Kust.Oy Kirja, 1913
Credits: Jari Koivisto
START OF THE PROJECT GUTENBERG EBOOK PUUTARHURI ***
PUUTARHURI
Suorasanaisia runoelmia
Kirj.
RABINDRANATH TAGORE
Suomentanut
Eino Leino
Helsingissä, Kustannusosakeyhtiö Otava, 1913.
1
Palvelija
Säälikää palvelijaanne, kuningatar!
Kuningatar
Vastaanotto on loppunut ja minun kaikki palvelijani ovat poistuneet.
Miksi tulet niin myöhäisellä hetkellä?
Palvelija
Silloin kun aikanne muiden kanssa on päättynyt, on minun hetkeni tullut.
Saavun kysymään, mitä viimeisellä palvelijallanne on tekemistä.
Kuningatar
Mitä voit odottaa, kun olet niin myöhään tullut?
Palvelija
Päästäkää minut yrttitarhanne tarhuriksi!
Kuningatar
Mitä hullutusta tämä on?
Palvelija
Tahdon jättää muun toimeni.
Heitän miekkani ja peitseni tomuun. Älkää lähettäkö minua pitkille matkoille! Älkää pyytäkö mitään uusia voittoja minulta! Mutta sallikaa minun tulla yrttitarhanne tarhuriksi.
Kuningatar
Mitkä olisivat velvollisuutesi?
Palvelija
Palvella joutilaita päiviänne.
Tahdon pitää tuoreena ruohotien, jota aamuin kävelette ja jolla kuolemaa odottavat kukkaset joka askeleella teidän jalkaanne ylistäen tervehtivät.
Tahdon tuudittaa teitä saptaparnan oksien keinussa, missä varhaisen illan kuu yrittää suudella läpi lehtien teidän heleitä helmojanne.
Tahdon täyttää hyvänhajuisella öljyllä lampun, joka palaa vuoteenne vierellä, ja koristaa jalkajakkaranne sandelipuun ja safranin kummallisilla kuvioilla.
Kuningatar
Mitä tahdot palkaksesi?
Palvelija
Luvan saada pitää kädessäni pientä kättänne, herkkien lotusumppujen kaltaista, ja sirottaa kukkaköynnöksiä nilkkoihinne; kirjailla jalkapohjanne ašokanterälehtien punaisella mehulla ja suudella pois jokaisen tomuhiukkasenkin, joka mahdollisesti olisi kiintynyt niihin.
Kuningatar
Pyyntösi on täytetty, palvelijani. Pääset yrttitarhani tarhuriksi.
"Kuuletko yksinäisissä ajatuksissasi viestin haudan tuolta puolen?"
"Ilta on tullut", sanoi runoilija, "ja minä kuuntelen, sillä joku voi kutsua minua kylästä myöhälläkin.
"Minä valvon, sillä voi tapahtua, että nuoret, eksyneet sydämet tapaavat toisensa ja kaksi kiihtynyttä silmäparia rukoilee säveliä taittamaan heidän hiljaisuutensa ja puhumaan heidän puolestaan.
"Kenpä kutoisi heille intohimoisia lauluja, jos minä istuisin elämän rannalla miettien kuolemaa ja mitä sen takana on?
"Varhaisen ehtoon tähti häviää.
"Hautajaisrovion hehku sammuu vähitellen hiljaisella joella.
"Sakaalit huutavat kuorossa aution talon kartanolta kapean kuunkairan valossa.
"Jos joku vaeltaja, kotinsa jättäen, tulee tänne valvomaan yönsä ja painunein päin kuuntelemaan pimeyden muminaa, kuka kuiskisi hänen korvaansa elämän salaisuuksia, jos minä sulkisin oveni ja koettaisin vapautua kuolevaisen velvollisuuksista?
"Vähäpätöistä on, että hapseni harmenevat.
"Olen iäti niin nuori ja niin vanha kuin nuorin ja vanhin tässä kylässä.
"Eräiden hymyt ovat suloiset ja yksinkertaiset ja toisten silmät tuikkivat veitikkamaisesti.
"Eräiden kyyneleet kumpuavat päivänvaloon ja toisten kyyneleet piilevät pimentoon.
"Kaikki he kaipaavat minua, eikä minulla ole aikaa tuumia haudantakaista.
"Olen kaikkien kanssa yhtaikainen, ja mitä merkitsee, että hapseni harmenevat?"
3
Aamulla minä heitin verkkoni mereen.
Vedin esille synkästä syvyydestä kumman kauniita ja kumman muotoisia esineitä — eräät loistivat kuin hymyily, toiset kimallelivat kuin kyyneleet, toiset punertivat kuin morsion poskipäät.
Kun menin kotiin päiväntaakkoineni, istui lemmittyni jouten yrttitarhassa ja poimi rikki kukkien lehtiä.
Pysähdyin hetkiseksi, laskin sitten hänen jalkojensa juureen kaiken saaliini merellisen, ja seisoin äänetönnä.
Hän vilkaisi niihin ja sanoi: "Mitä kummia nuo ovat? En tiedä mihin ne kelpaavat!"
Painoin pääni alas häpeissäni ja ajattelin: "En ole taistellut niiden puolesta, en ole torilta ostanut niitä. Ne eivät ole mitään sopivia lahjoja hänelle."
Niin minä heitin yön kuluessa ne yksitellen kadulle.
Aamulla tulivat matkamiehet, kokosivat ne maasta ja veivät vieraille maille mukanaan.
4 Voi minua, miksi he rakensivat huoneeni kauppalan katuvieremälle?
He kiinnittävät lastilaivansa minun puitteni läheisyyteen.
He tulevat ja menevät ja vaeltavat kuhun tahtovat.
Istun ja vartioin niitä; aikani kuluu niin. En voi sysätä syrjään niitä, ja niin menevät päiväni.
Öin päivin kaikuvat heidän askeleensa oveni ulkopuolelta.
Turhaan minä huudan: "En tunne teitä."
Eräitä heistä tunnen sormin, toisia sieraimin, valtimoni veri on heidät tuntevinaan, ja toiset heistä ovat tutut minun unelmilleni.
En voi sysätä syrjään heitä. Kutsun heitä ja sanon: "Tulkaa talooni kuka haluaa. Tulkaa, tulkaa!"
